Texas co-leads $45 million settlement with Cash App over deceptive security claims

Block, Inc., the financial technology company behind the popular mobile payment platform Cash App, has agreed to a $45 million multistate settlement to resolve allegations that it misled consumers about its security measures and failed to provide legally required fraud protections.

Texas Attorney General Ken Paxton co-led the investigation alongside 45 other states, concluding that the company left users vulnerable to rampant scams while failing to adequately investigate unauthorized transactions.

Under the terms of the agreed final judgment, Texas will receive nearly $5 million of the total payout. The settlement also forces Cash App to implement sweeping changes to its customer service operations, marketing practices, and fraud-handling procedures.

Key Settlement Details

The Financial Payout:

Block will pay $45 million to be divided among the 46 participating states. Texas will receive precisely $4,916,821.80, with roughly $1.64 million allocated for attorney and investigative fees and the remainder directed to the state’s supreme court judicial fund and general revenue.

Compensation:

Block must provide between $75 million and $120 million in consumer redress. This requirement will be satisfied by a separate January 2025 consent order with the Consumer Financial Protection Bureau (CFPB).

No Admission of Fault:

Block denied all allegations of wrongdoing and liability, stating it entered into the judgment solely to conclude the legal matter.

The Allegations Against Cash App

State investigators believe Cash App aggressively marketed itself as a safe, bank-like alternative, specifically targeting users to direct-deposit paychecks and government benefits into their accounts. However, as the platform's user base grew, internal protections failed to keep up with skyrocketing fraud.

According to the investigation, the company used lax verification standards, failed to offer phone-based customer support for years, and engaged in deceptive social media promotions. 

When users fell victim to scammers, they were often locked out of their accounts or left with no viable way to recover stolen funds. Investigators also found that the company routinely failed to conduct prompt error investigations or issue refunds as mandated by federal law, including the Electronic Fund Transfer Act.

What they're saying:

"When Texans trust a financial platform with their paychecks, savings, and family’s security, they deserve to be fully protected as promised. I will make sure that they are. This settlement ensures that Texans who were harmed can recover what they are owed," said Texas Attorney General Ken Paxton.

Mandatory Business Reforms

To comply with the settlement, Block must implement major operational changes within 30 days of the judgment’s effective date. These reforms include:

• Enhanced Customer Support: Cash App must provide 24-hour customer support. This must include live, toll-free human telephone support for at least 13.5 hours every day and live human chat support for at least 18 hours every day.
• Streamlined Fraud Reporting: The company is prohibited from forcing victims to take unnecessary hurdles—such as contacting the recipient of a fraudulent transaction or filing a police report—before initiating an unauthorized transaction investigation.
• Deceptive Claims Bans: Block can no longer misrepresent the extent to which Cash App functions as a bank, nor can it mislead users regarding FDIC "pass-through" insurance protections on their funds.
• Marketing Restrictions: The company must discontinue marketing practices known to actively increase user exposure to fraud.
• Direct Warnings: Cash App must display clear, prominent consumer fraud warnings directly inside the app's user interface whenever a transfer is suspected of being fraudulent.

The structural reforms and reporting requirements outlined in the settlement will remain in place and be monitored for the next five to seven years.

TexasMoney